The U.S. Small Business Administration (SBA) has suspended more than 111,000 California borrowers and will seek to recoup $8.6 billion in suspected fraudulent aid linked to the Covid pandemic.
SBA Administrator Kelly Loeffler revealed the action Friday following a visit to San Diego, where she detailed suspected fraudulent activity across SBA pandemic-era loan programs, including 118,489 Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) loans.
“Once again, the Trump SBA is taking decisive action to deliver accountability in a state whose unaccountable welfare policies have created a culture of fraud and abuse at the expense of law-abiding taxpayers and small business owners,” she said.
Loeffler blamed lack of enforcement by the Biden administration, continuing:
Today, we announced we have suspended nearly 112,000 borrowers tied to at least $9 billion in suspected fraud. This staggering number represents the most significant crack-down on those who defrauded pandemic programs, and it illuminates the scale of corruption that the Biden Administration tolerated for years. As we did in Minnesota, we are actively working with federal law enforcement to identify the criminals who defrauded American taxpayers, hold them to account, and recoup the stolen funds. As we continue our state-by-state work, our message is clear: pandemic-era fraudsters will not get a pass under this Administration.
PPP loans were dispersed during the widespread Covid economic shutdown to help small businesses keep workers on the payroll.
EIDL loans are part of an SBA program that provides low-interest loans to help businesses survive during disasters like hurricanes, floods, wildfires and, in Covid’s case, a pandemic.
The California action follows similar SBA moves in Minnesota, where the agency announced it suspended 6,900 borrowers associated with 7,900 potentially fraudulent PPP and EIDL loans worth approximately $400 million.
“Suspended borrowers are prohibited from executing new small business and disaster loans and are not eligible for other SBA programs such as federal contracting in the 8(a) Business Development Program,” the SBA said in a statement.
Loeffler’s announcement follows California Attorney General Rob Bonta claiming earlier in the week that the Trump administration was promoting “baseless claims” of persistent fraud in the state.
“The Trump Administration is attempting to take the issue of fraud — a very real, and national issue — and weaponize it against Democratic states,” Bonta said in a statement released Tuesday.
He continued, “Trump and his cronies are alleging that the government of California is somehow in on the fraud. This lie is aimed at sowing distrust and conjuring up a reason to go after states he sees as enemies. We’ve seen this playbook from the President before, it’s reckless and dangerous.”
The statement noted that California’s Department of Justice has recovered nearly $2.7 billion in various fraud schemes across the last 10 years and worked with the federal government in doing so.
The press office for Gov. Gavin Newsom mocked Loeffler’s announcement in an X Post, saying, “OMG. The Trump Administration found MAJOR FRAUD in programs THEY control. The state has no role running / administering these programs.”
However, California’s troubles when it comes to fraudulent capture of federal funds may have just begun. The SBA announcement could be seen as the Trump administration’s opening salvo, with federally funded social services programs also expected to come under scrutiny.
As Breitbart News reported last month, California reportedly ranks as the fourth largest economy in the world, leaving plenty of opportunities for financial malfeasance.
Steve Hilton, a Republican candidate for governor, has said a preliminary review of purported fraud across California based on evidence from whistleblowers, contractors, and service providers led him to a stunning number.
Hilton predicted fraud in California would exceed $250 billion.
Contributor Lowell Cauffiel is the author of the New York Times true crime best seller House of Secrets and nine other crime novels and nonfiction titles. See lowellcauffiel.com for more.
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